Hi guys, I'm looking at buying a car wash business with the building also as a long term investment. It is coin operated and low overheads . How do banks look at these sort of investments? What sort of maximum lvr would you most likely get? I have done the numbers and the profit will adequately cover the loan repayments over a 15 year or so term. Thanks
I did finance for a car wash a while ago. VERY IMPORTANT!!! If the premises is on an old petrol station be sure that it has been remediated at some point. Even if you can prove it has been remediated in the past you are most likely going to be asked for an environmental report that will set you back ~$30,000. The last car wash I did was 70% of the business value and premises. There was only one bank that would do 70% and everyone else was at 50%. That was a very strong deal where the existing manager was purchasing the business. They are going to want to see experience running a business (preferably a car wash). If you don't have that LVR is going to be reduced even further. With this sort of finance there's really is no one size fits all answer, it's going to depend on your specific situation.
are you buying the business and its chattels as a going concern or are you purchasing the land, chattels plus business as going concern? you'll likely get a deal @ 60% LVR for the property however as Simon mentioned, you'll need to satisfy the environmental piece. for the chattels i'd encourage a separate valuation by dominions/pickles/grays etc - they'll give you fair market value (fmv) and orderly liquidation values (olv). the bank will prob give you an equipment finance product (likely a chattel mortgage) financed at OLV.
Not loan related, but some advice if you do end up buying one.. * Check for damage on the coin collecting machines. * Consider installing really high quality CCTV that has motion sensors which links to your phone. * Empty the machines every day before it gets dark (don't leave the days earnings in the machines overnight). There are a couple of coin operated car washes in Sydney that I know of that REGULARLY get people coming along in the early hours of the morning with a portable angle grinder and pry bar. Such easy targets.
Ultimate car wash = $16 Deposit @ 10% = $1.60 Financed amount @ 90% = $14.40 Interest rate = 5.5% Loan term = 4 minutes Application fee $300 Interest due at completion of car wash = $0.00000603 Principle due at completion of car wash = $16. Total loan cost $300.00000603 Just tap and go with your debit card or rummage for change. It will be quicker and much, much cheaper.
